Wednesday, September 24, 2008

McCain aide's firm 'accepted fees from Freddie Mac'

A consulting firm owned by John McCain's campaign manager accepted large fees from a mortgage company at the centre of the financial crisis ripping through Wall Street, according to reports today.

A firm led by Rick Davis, a long-time McCain aide and chief of the Republican candidate's day-to-day campaign, received payments totalling $500,000 between the end of 2005 and last month from Freddie Mac, according to the New York Times and others this morning.

The reports appear to directly contradict comments by McCain at the weekend. Asked in an interview about ties between Davis and the mortgage giants, McCain responded that Davis , "has had nothing to do with it since, and I'll be glad to have his record examined by anybody who wants to look at it".

Freddie Mac was taken over by the federal government this month, along with fellow mortgage giant Fannie Mae, as credit markets froze and threatened the health of the US economy.

McCain and Barack Obama have sparred over ties to lobbying firms and financial institutions caught up in the Wall Street turmoil. Freddie Mac and Fannie Mae both had long histories of aggressive lobbying to fend off government restrictions on their business.

The McCain campaign has run advertisements saying Obama takes housing advice from Frank Raines, a former Fannie Mae chief executive, a link the Obama campaign denies.

Citing two anonymous sources, the New York Times said Davis did not do much work for Freddie Mac, other than to address a meeting of high-level employees in October 2006, and was paid $15,000 per month. Davis took a leave from his company, Davis Manafort, to work for McCain's presidential campaign, but as an owner still holds an equity stake in the firm.

A top aide to the Obama campaign this morning suggested that Freddie Mac had paid Davis merely to gain access to McCain. "It is now clear that both John McCain and Rick Davis did not tell the truth about Davis's continuing financial relationship with Freddie Mac, one of the actors at the centre of this financial crisis," said Dan Pfeiffer, communications director to the campaign. "It's troubling not only that Davis's firm—with which he is still associated and which the McCain campaign paid directly last year—continued to be compensated by Freddie Mac until as recently as last month, but that the firm did little work and apparently was being paid simply to provide access to the McCain campaign."

On Monday, the New York Times reported that Davis received an additional $30,000 to $35,000 per month as president of the Homeownership Alliance , an organisation controlled by Fannie Mae and Freddie Mac aimed at combating government efforts to restrict their business. When that organisation dissolved, Freddie Mac began paying Davis Manafort.

The McCain campaign did not dispute the payments to Davis Manafort, but this morning released a long attack on the legitimacy of the New York Times article.

"Today the New York Times launched its latest attack on this campaign in its capacity as an Obama advocacy organization," the statement began.

It continued: "Therefore this 'report' from the New York Times must be evaluated in the context of its intent and purpose. It is a partisan attack falsely labelled as objective news. And its most serious allegations are based entirely on the claims of anonymous sources, a familiar yet regretful tactic for the paper."

"The master class has always declared the wars; the subject class has always fought the battles. The master class has had all to gain and nothing to lose, while the subject class has had nothing to gain and everything to lose--especially their lives." Eugene Victor Debs